Industry NewsMarkets & Economy

New-home production plummets after tax credit deadline

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Housing starts fell 10 percent from April to May, to a seasonally adjusted annual pace of 593,000 homes per year -- up 21.5 percent from a record low in January 2009 but far below the 2-million-homes-per-year pace seen during the housing boom, the Census Bureau reported today.With the expiration of the federal homebuyer tax credit at the end of April, single-family housing starts fell even more dramatically -- 17.2 percent from April to May -- to a seasonally adjusted rate of 468,000 homes per year.Analysts are watching housing starts carefully because, with the exception of the dot-com bust at the turn of the century, housing tends to lead the economy into and out of recessions.Although housing starts and sales were expected to fall off after the expiration of the tax credit, the question now is whether the latest numbers are a blip on the road to a sustainable recovery, or a larger setback.The Mortgage Bankers Association recently reported that demand for purchase loans during the we...